Uncertainty and simple monetary policy rules an illustration for the United Kingdom

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Published by Bank of England in London .

Written in English

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Book details

StatementSimon Hall ... [et al.].
SeriesWorking paper / Bank of England -- No.96, Working paper series -- No.96, Working paper (Bank of England) -- No.96.
ContributionsHall, Simon., Bank of England.
The Physical Object
Pagination44p.
Number of Pages44
ID Numbers
Open LibraryOL18804604M

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Uncertainty and monetary policy rules in the United States.: An article from: Economic Inquiry [Christopher Martin, Costas Milas] on *FREE* shipping on qualifying offers. This digital document is an article from Economic Inquiry, published by Author: Christopher Martin, Costas Milas.

This paper reports an investigation of the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy. Using a five-equation empirical model of the United Kingdom, it is shown that changes in the extent of additive uncertainty have no effect on the 'optimal' degree of policy responsiveness to shocks to the economy.

This paper reports an investigation of the effects of additive and multiplicative uncertainty upon the stabilization properties of a simple base money rule for monetary policy. Using a five-equation empirical model of the United Kingdom, it is shown that changes in the extent of additive uncertainty have no effect on the "optimal" degree of Cited by: Amano, Robert, Don Coletti, and Tiff Macklem.

“Monetary Rules When Economic Behavior Changes.” Forthcoming in Reserve Bank of New Zealand Conference Volume onMonetary Policy Under Uncertainty.

Google ScholarCited by: This paper reports an investigation of the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy. Using a five-equation empirical model of the United Kingdom, it is shown.

Title: Simple Monetary Policy Rules Under Model Uncertainty - WP/99/75 Created Date: 7/24/ PMCited by: 1. that policy-makers should respond by less to shocks in the face of multiplicative uncertainty.

And as Uncertainty and simple monetary policy rules book uncertainty rises, so the optimal degree of policy reaction falls. This accords with Brainard’s () theoretical analysis and could be interpreted as justifying a gradualist monetary policy. Simple Monetary Policy Rules and Exchange Rate Uncertainty Article in Journal of International Money and Finance 24(3) April with 44 Reads How we measure 'reads'.

Using stochastic simulations and stability analysis, the paper compares how different monetary rules perform in a moderately nonlinear model with a time-varying nonaccelerating-inflation-rate-of-unemployment (NAIRU). Rules that perform well in linear models but implicitly embody backward-looking measures of real interest rates (such as conventional Taylor rules) or substantial interest rate Cited by: 1.

Using stochastic simulations and stability analysis, the paper compares how different monetary policy rules perform in a moderately nonlinear model with a time-varying NAIRU.

Rules that perform well in linear models but implicitly embody backward-looking measures of real interest rates (such as conventional Taylor rules) or substantial interest rate smoothing perform very poorly in Cited by: In conclusion, although all rules are fairly robust to variations in the exchange rate model, the T rule and the Q rule (which is very similar to the T rule) are more robust to uncertainty about the formation of exchange rate expectations.

Thus, the traditional Taylor rule seems both efficient and robust as a guide for monetary policy in an open by: Uncertainty and Simple Monetary Policy Rules - An illustration for the United Kingdom Article (PDF Available) July with 45 Reads How we measure 'reads'.

CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): 5 1 Introduction 7 2 Monetary policy and uncertainty 7 3 Method 13 4 Results 21 5 Conclusions 29 Data Appendix 32 References 34 5 Abstract We investigate the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy.

"Simple monetary policy rules and exchange rate uncertainty," Proceedings yi:mar:x:2, Federal Reserve Bank of San Francisco. Batini, Nicoletta & Harrison, Richard & Millard, Stephen P., "Monetary policy rules for an open economy," Journal of Economic Dynamics and Control, Elsevier, vol.

27(11), pages CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): We analyze the performance and robustness of some common simple rules for monetary policy in a new-Keynesian open economy model under different assumptions about the determination of the exchange rate.

Adding the exchange rate to an optimized Taylor rule gives only slight improvements in terms of the volatility. Monetary Policy Rules in an Uncertain Environment Gino Cateau and Stephen Murchison, Canadian Economic Analysis Department • Central banks have increasingly focused on a systematic approach to monetary policy.

Simple monetary policy rules help to facilitate the com-munication of monetary policy to the public and enhance its predictability. Monetary Policy Rules illustrates that simple policy rules are more robust and more efficient than complex rules with multiple variables.

A state-of-the-art appraisal of the fundamental issues facing the Federal Reserve Board and other central banks, Monetary Policy Rules is essential reading for economic analysts and policymakers alike.

Simple Price-Level-Targeting versus Inflation-Targeting Monetary Policy Rules under Model Uncertainty Sebastian Schmidt∗ Goethe University Frankfurt and CFS December, Abstract This paper compares the performance and robustness of simple price-level-targeting (PLT) and inflation-targeting (IT) monetary policy rules in three non-nested File Size: KB.

multiplicative uncertainty. And as multiplicative uncertainty rises, so the optimal degree of policy reaction falls. This accords with Brainard’s () theoretical analysis and could be interpreted as justifying a gradualist monetary policy.

Uncertainty and simple monetary policy rules - An illustration for the United Kingdom. Get this from a library. Simple monetary policy rules under model uncertainty.

[Peter Isard; Douglas Laxton; Ann-Charlotte Eliasson; International Monetary Fund. Research Department.] -- Compares how different monetary rules perform in a moderately nonlinear model with a time-varying nonaccelerating-inflation-rate-of-unemployment (NAIRU).

Robustness of Simple Monetary Policy Rules under Model Uncertainty Andrew T. Levin, Volker Wieland, John Williams. Chapter in NBER book Monetary Policy Rules (), John B. Taylor, editor (p.

- ) Published in January by University of Chicago PressCited by: April Monetary Policy Uncertainty and Monetary Policy Surprises. Michiel De Pooter, Giovanni Favara, Michele Modugno, and Jason Wu.

Abstract: Monetary policy uncertainty affects the transmission of monetary policy shocks to longer-term nominal and real yields. 6 Robustness of Simple Monetary Policy Rules under Model Uncertainty Andrew Levin, Volker Wieland, and John C. Williams Introduction In the face of uncertainty about the true structure of the economy, policy- makers may disagree about the macroeconomic effects of monetary policy and thus about the appropriate policy by:   Simple monetary policy rules and exchange rate uncertainty Author: Kai Leitemo and Ulf Söderström Series: Working Paper Number: 6/ Simple and Robust Rules for Monetary Policy by John B.

Taylor and John C. Williams* Prepared for the Handbook of Monetary Economics Edited by Benjamin Friedman and Michael Woodford Ap Abstract This paper focuses on simple normative rules for monetary policy which central banks can use to guide their interest rate Size: KB.

Looking across multiple economic forecasts helps to capture some of the uncertainty surrounding the economic outlook and, by extension, the outlook for monetary policy. Download our spreadsheet to customize your own rule and see all the forecasts, rules, and funds rate paths.

This model-averaging approach is taken in Levin, Wieland, and Williams (), who use five disparate macroeconometric models of the U.S. economy to study how best to conduct monetary policy when facing model uncertainty.

Focusing on simple rules in which the Federal Reserve is assumed to set the federal funds rate in response to inflation, the. for non-linear monetary policy rules. Section three presents the model and solves for optimal min-max policy under uncertainty. Section four studies the properties of the resulting non-linear instrument rule, while section five provides empirical support for the form of non-linearity analyzed here.

Finally, section six draws some conclusions. Uncertainty and Simple Monetary Policy Rules - An illustration for the United Kingdom. By Simon Hall, Chris Salmon, Tony Yates and Nicoletta Batini.

Abstract. This paper reports an investigation of the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy. Using a. Abstract. 5 1 Introduction 7 2 Monetary policy and uncertainty 7 3 Method 13 4 Results 21 5 Conclusions 29 Data Appendix 32 References 34 5 Abstract We investigate the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy.

Levin, Andrew and Wieland, Volker and Williams, John C., Robustness of Simple Monetary Policy Rules Under Model Uncertainty (May ).

NBER Working Paper No. wCited by: Friedman advocated the use of simple prescriptions for monetary policy--such as the k percent money growth rule--which he felt would work reasonably well on average while avoiding the pitfalls of attempting to fine-tune the economy in the face of pervasive uncertainty (Friedman, ).

The means by which policy-makers account for and respond to uncertainty has evolved over time, as have the types of uncertainty they have faced in making decisions.2 Consider all the uncertainties involved in using economic models—the indispensable tools for practitioners of monetary policy.

The Bank of Canada is an inflation-targeting. Uncertainty about model parameters or, more generally, about model structures can be so complex that an approach encompassing all cases is very difficult. In this context, the problem is now rather cast in terms of ensuring "robustness" of monetary policy rules and, more generally, of monetary policies across models.

Monetary Policy Rules illustrates that simple policy rules are more robust and more efficient than complex rules with multiple variables. A state-of-the-art appraisal of the fundamental issues facing the Federal Reserve Board and other central banks, Monetary Policy Rules is essential reading for economic analysts and policymakers : Get this from a library.

Robustness of simple monetary policy rules under model uncertainty. [Andrew T Levin; Volker Wieland; John C Williams; National Bureau of Economic Research.] -- Abstract: The Americans With Disabilities Act (ADA) requires employers to accommodate disabled workers and outlaws discrimination against the disabled in hiring, firing, and pay.

Monetary policy uncertainty and interest rate targeting. Author links open overlay such simple delegation schemes will no longer be sufficient.

6 It is crucial for the government to reduce the macroeconomic variability stemming from the uncertain central bank preferences. The analysis below addresses the role of interest rate targets as Cited by: 2. recent reduction in monetary policy uncertainty is a potential factor a ffecting the low levels of long-term interest rates and ßattened yield curves.

In the following section, we present a simple model that relates monetary policy uncertainty to term structure of Cited by: 1. Policy Rules for Inflation Targeting, pp Glenn Rudebusch and Lars Svensson Robustness of Simple Monetary Policy Rules under Model Uncertainty, pp Andrew Levin, Volker Wieland and John Williams A Historical Analysis of Monetary Policy Rules, pp John Taylor What Should the Monetary Authority Do When Prices Are Sticky?, pp Cited by: The first rule is based on the policy rule suggested by Taylor ().

Taylor () fixed r* to 2 percent and used the GDP deflator as the measure of update the rule, we make two modifications. First, given the Federal Open Market Committee’s (FOMC) Statement on Longer-Run Goals and Monetary Policy Strategy, we measure π t as inflation in the price index for personal Cited by: 6.

ably approximated by a simple interest-rate rule.5 however, the formulation of monetary policy rules must take into account the uncertainty that policy-makers face, since rules designed under the assumption of no uncertainty are often disastrous when one explicitly considers uncertainty.

in particular, a rule may, in theory, perform quite well.Uncertainty and Monetary Policy Rules in the United States “Uncertainty is not just an important feature of the monetary policy landscape; it is the defining characteristic of that landscape” (Greenspan, ).

1) Introduction Uncertainty is a central issue in monetary policy, as the quote from Alan Greenspan above illustrates.Working Paper Series. Uncertainty shocks, monetary policy and long-term interest rates.

Gianni Amisano, Oreste Tristani Disclaimer: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.

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